This is three times the amount Facebook were willing to pay for Instagram and a lot of investors are confused on the social networks considerations when putting this huge sum on the table, especially to a startup currently only making money through third party funding.
Snapchat does have the ideal demographic Facebook is trying to target, teens. News recently has said Facebook is no longer the cool social network, with teenagers and “hipsters” putting their life-story on Twitter and Instagram instead.
The idea of having disposable information apparently comforts a lot of users on Snapchat, where a photo on Instagram, tweet on Twitter and post on Facebook can stay forever, Snapchat gets rid of the snap within seconds and notifies the taker if someone gets a screenshot of the photo.
Snapchat has around 10 million active users, a far step away from Facebook at over 1 billion users and a shy fall away from Instagram’s 200 million active users. Despite the low stats on the user and revenue side, Facebook and many others believe Snapchat is a quality investment.
We are not sure if Snapchat will ever be “bought out” from the looks of things the startup is either quietly confident on the revenue and member front or they are seriously not up for being another Instagram/Tumblr $1 billion acquisition, even though this would be a $3 billion acquisition.
The other route would be an IPO, Twitter recently announced their public offering and currently sits around $40 on the stock market, even with no profit scheduled for 2013. It feels like this is the decade of IPO’s with no revenue but a great service and integral part in social world.